The Korea Exchange (KRX) announced Friday that the Securities and Futures Commission, Korea's financial supervisory committee, has suspended trading on Kyungnam Pharm over accounting violations.
According to the KRX Marketdata, the company intentionally overestimated sales and account receivable worth 4.9 billion won ($4.6 million) to boost its stock price from 2008 to 2013. Furthermore, it tried to conceal its illicit activities by inflating construction cost to overestimate its tangible assets.
After 2013, the company did cancel the transaction by listing its processing assets (trade receivables, property, plant and equipment) as a loss. However, although the company should have recorded its loss as a decrease in retained earnings carried forward, the company wrote it down as current expenditure, underestimating its net profit.
The supervisory agency ordered the company to pay a fine of 40 million won while designating an auditor for the company until 2020.
The commission also filed an accusation against the company’s former CEO and board member of accounting fraud to the prosecution.
The suspension will continue until March 22, when the committee will decide on whether the suspension of transactions is subject to a substantive examination or not.
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